TPP120:

How to build a property empire by recycling your deposit

We all have a finite amount of cash, and that puts a ceiling on the total size of your portfolio: when the money for deposits runs out, the only way to buy more is to hope the market rises so you can refinance.

Unless, that is, you “recycle your cash” – which is really nothing more than either buying below market value or forcing the appreciation (or both). It’s harder work than just buying a top-notch property at full market value, but it’s the route to capital preservation – and puts you in control of when you scale.

In this episode, we discuss…

The two main, inter-related mechanisms that underpin recycling your cash

The timeframe in which you can typically refinance

How to finance this type of project

The barriers to doing it successfully

Why it’s so worthwhile

We also shared an example to explain the general concept:

You buy a property for £100,000 by putting in a £25,000 deposit and taking out a 75% loan-to-value mortgage with Lender A for £75,000.

Later, you get the property revalued at £133,500, allowing you to take out a mortgage for 75% of the new value from Lender B – which works out to a loan of £100,000.

You pay the original £75,000 back to Lender A and put your initial £25,000 back in the bank to use again.